The IADB loan to Guatemala for the purpose of "generating more tax revenue" is another example of the current inflation of funding promoted by international bureaucracy to pay the salaries of national bureaucracies.
EDITORIAL
An article by Jose Raul Gonzales in the blog of Guatemala's economic think tank CIEN, reveals one of the many cases in which international financial organizations, supposedly created to help nations develop, engage in financing consulting activities, which end up being just expenses instead of financing real economic sectors.
International financial entities will increase the amount of finance available for private businesses and projects in Latin America
The International Finance Corporation (IFC), the World Bank, the Inter-American Development Bank (IDB) and the American Investment Corporation (IIC) have announced their willingness to increase resources for the financing of "eco-friendly projects, infrastructure, agribusiness and even educational projects," developed by private enterprise.
The entity is analyzing suspending or extending loans that had been approved to finance part of the government’s budget.
Over $400 million designated for health affairs, competitiveness, small and medium enterprises, among other sectors, may not be disbursed unless congress speeds up their approval.
This is the view of the Inter-American Development Bank, who will discuss with government officials whether to extend or suspend the loans already approved.
The country is negotiating a loan with the World Bank for $ 100 million and another with the BCIE for $ 265 million in order to assist in the emergency.
This was announced by Finance Minister Edgar Balsells during the Donor Conference on Reconstruction. These loans adds to the $ 250 million loan announced by the IDB.
According to Sigloxxi.com, "These resources, he explained, will join others with the implementation of a unique and temporary tax for employers and employees, as well as Anti-Evasion Law and donations from friendly countries, it is estimated that reconstruction would have a total cost of $ 1,905 million."
The Inter-American Development bank will earmark $1.8 billion to fund projects related to the Central American integration process.
This was stated by Luis Alberto Moreno, president of the bank, at the meeting of the Central American Integration System (SICA).
Moreno was quoted by Laprensagrafica.com as saying: “More and better regional integration will be key for economic recovery, global competitiveness and employment generation, as well as promoting equality and the reduction of poverty".
The loan to the Guatemalan bank aims to finance import and export operations.
Within the Trade Finance Facilitation Program (TFFP), the Inter-American Development Bank (IDB) granted Guatemalan Bank G&T Continental $70 million.
Flavio Montenegro, G&T CEO, remarked: "This transaction strengthens our trade operations and supports the economy of Guatemala, as it increases the funding available for our nation's industries".
BID will finance a loan of $22 million for the implementation of a physical land registry system to cover protected areas in Guatemala.
Guatemala will strengthen its national network of protected areas by improving its land registry system through a loan of $22 million USD from the Inter-American Bank of Development (BID).
The loan will allow Guatemala to provide geographical and legal security to areas under national administration which form part of the Guatemalan System of Protected Areas (SIGAP), thereby creating a modern physical land registry system.
As in Panama, there are hundreds of millions of untapped dollars in loans that were obtained to prevent illiquidity in the Costa Rican banking system.
The government of Costa Rica rejected the loan for $500 million that the Inter-American Development Bank (IADB) had granted at the end of 2008 and for which the approval by the Legislative Assembly had already been obtained.
In good times, multilateral lending agencies do not have too many customers. In times of crisis, everyone needs them.
To continue to grow and not stagnate, Latin America needs foreign investment in an amount ranging from 5% to 6% of the GDP in the region. It is $200 billion, a figure too large for the current scope of these credit institutions.
Rodrigo Lara Serrano pointed out in his article published in Americaeconomia.com that "multilateral bankers are going through times of plenty. ‘Everyone is knocking on the door and asking for money,’ said a source who asked to remain anonymous. Normally entities must search for good projects. 'Now we choose the projects, although this is delicate: How do you compare things when everyone says that their needs are of vital importance?'"
During a meeting of Governors, IDB President Luis Alberto Moreno announced that the entity will increase its support to countries in the region.
Proceso Digital published on its website: "’At this juncture, we have to lend more and that is our obligation and why we are here,' said the head of the IDB in his opening speech.
Moreno said the IDB is ready to meet this 'obligation' to raise capital to the region but he did not specify the amount.
The Congress approved two loans for $28.5 million which will be added to the $950 million that were approved last Tuesday to finance the national budget.
PRENSALIBRE.com reports, "The decision to approve another loan for $30 million (Q237 million) - in aid for the criminal justice system -, was postponed at the request of the "Eferregistas" lawmakers who asked for more time to analyze it, as they claimed that "not even the Supreme Court knew all the details."
Congress approved five loans totaling $950 million to finance this year's budget.
MIPUNTO.com reports on its website: "...while three other loans for $58 million are still pending, said a lawmaker.
The sub-head of the governing fraction, Nery Samayoa, explained that the funds will be granted by the Inter-American Development Bank and the World Bank."
In times of credit crunch from the usual sources, it is appropriate to remember that there are other alternatives for financing projects.
The Andean Development Corporation (CAF), the International Finance Corporation (IFC) of the World Bank, the Inter-American Investment Corporation (IIC) of the IDB, and the Central American Economic Integration Bank (BCIE) are all sources of financing for high impact development projects by the private sector which are highly unused by our bankers and businesses.
The IDB, the Andean Development Corporation (CAF) and the Latin American Reserve Fund announced that they will make $9.3 billion available to governments in the region to deal with the financial crisis.
The amount could double starting next year and is in response to the need for joint international action to deal with the crisis, the IDB, the Andean Development Corporation (CAF) and the Latin American Reserve Fund announced.
The funds from the IDB are to be used in the fight against malnutrition and to improve the health and education of the poorest of children in the country.
A $200 million loan will finance a conditional monetary transfer program called My Family is Progressing, which will fight the problems of chronic malnutrition and school absenteeism.
Despite the fact that Guatemala is a country with average income, almost half of its population is under 15 years of age and from this group 60% is poor and 40% extremely poor," said the head of the IDB team, Graciana Rucci. “The inter-generational transmission of poverty is a topic of great concern, especially in rural areas with indigenous populations. Nutritional, health and education indicators for this group all show that they are amongst the country's lowest.